In case people are wondering why the market is now behaving the way it is, we can always look for the reason fundamentally.
Last Friday, GBPJPY went up because BOJ continued monetary easing plus UK’s positive GDP data. A question most people would ask is why GBPJPY went down upon the release of the data is the data was positive. It could’ve been a corrective move for the day the moment data came out but the market eventually pushed it back up beyond that session’s high.
We can never really trade based on data. This has been proven ineffective and a lot of people lose money this way.
Data only provides the reason why after the price moved.
Beyond these two pieces of data, US NFP that day was mixed. Although US created more jobs, the earnings went low. This could be the reason why market reacted negatively (fearful) causing a JPY gain. This was only one of the reasons.
The other reason was beyond what was scheduled in the forex communities’ event calendar. These are events that cause systemic moves. Last Friday, we saw a possible bank run in Silicon Valley Bank as they declared insufficient funds. I am guessing that this was the major reason why markets became fearful (again, run to safety with a JPY gain).
This morning, at 620am (GMT+8), we saw the US government coming out, announcing that the banks will reopen on Monday, guaranteeing depositors their money. This could be the reason why GBPJPY went up from 161.40 to 163.00 (greedy, sell JPY)
“Fundamental data is the worst basis for a trade because markets will never react as expected. All the while, you don’t even know that the market is actually reacting to something else. For that reason, fundamentals should always be regarded as ENTERTAINMENT.”